6 reasons to file your tax return early

The number of people filing a tax return during the first week of the new financial year has increased by 20%, according to HMRC.

The latest figures show 295,250 submitted their 2023-24 self-assessments between 6 and 12 April. That's despite a drop in customers filing on the first day of the new tax year. There were almost 10,000 fewer returns filed on 6 April 2024 than last year – from 77,517 to 67,870. 

The final 31 January deadline for online returns may seem like a long way off, but there are lots of benefits to filing well in advance. Here are six reasons why you should join the thousands of people submitting tax returns early:

1. Time to plan

Starting the process early means you have plenty of time to prepare all the information and documents you need to file an accurate return. That includes your National Insurance number, receipts and invoices, bills, bank statements, tenancy agreements, student loan statements, details of any benefits you’ve received, and whatever other details are relevant to your circumstances. 

If you're employed, you'll have to wait for your P60 form to arrive at the end of May.

Getting in early is also a good idea if you're a first time filer. The deadline for registering with HMRC is 5 October but the process can take time. Before you can file, you'll need to wait to receive your Unique Taxpayer Reference (UTR) number through the post and you'll also be sent a separate access code to use HMRC's online services.

The whole process can take a couple of weeks, so getting the ball rolling as early as possible will save you last-minute stress and possibly a fine if you end up missing the deadline.

Remember, the deadline for paper returns is even earlier. Those customers have to get their self-assessment form in by 31 October.

• Find out more: how to fill in a self-assessment tax return

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2. Easier to budget

Remember the final payment deadline is also 31 January. Doing your self-assessment early means you know exactly what you will need to pay when it's time and you can plan your finances accordingly. 

If you wait until the last minute, you may find you can't pay the full amount owed and could face a fine.

• Find out more: 5 ways to pay your self-assessment tax bill

3. Avoid costly mistakes

Giving yourself more time means you’re less likely to have to rush your tax return, which can lead to careless mistakes. Double or triple-check all of the information, so you can correct any errors before submitting to HMRC. You'll also have plenty of time to source extra paperwork, if you need to.

It's important to make sure your tax return is accurate, as HMRC can impose fines for mistakes. The penalties are based on the amount of tax you owe, and depend on the kind of mistake HMRC deems you to have made.

• 0% charge: you've taken 'reasonable care' to fill out your tax return correctly
• 0%-30% charge: you've been careless and made mistakes
• 20%-70% charge: you've deliberately underestimated your tax
• 30%-100% charge: you've deliberately underestimated your tax and tried to conceal it.

So before you start the self-assessment process, check you have everything you need to accurately calculate the tax owed. Don’t worry if you’re still waiting on a few figures – you can still file your return with estimations and confirm the exact amounts at a later date. Just make it clear when you submit the form. 

3. Get refunds quicker

If you're self-employed and pre-pay your tax by payments on account, any refunds you're owed by HMRC won’t be processed until it receives your tax return. 

By filing several months in advance, when the tax office is likely to be quieter, you might find you'll receive rebates more quickly.

• Find out more: how to calculate your tax bill

4. Don't get fined

HMRC imposes fines for tardiness. You’ll usually have to pay £100 if your tax return is even a day past the deadline (31 January). It’s then £10 for each additional day (capped at 90 days), plus the £100 initial fine – coming to a total of £1,000. 

If you still haven't filed your return after six months, you’ll either be fined £300 or 5% of the tax due (whichever is higher), on top of the penalties already mentioned. 

If you’re 12 months late you’ll be whacked with an additional £300 fine, or 5% of the tax due, plus the aforementioned penalties. In the most serious cases, you may be fined 100% of the tax due.

HMRC may let you off if you have what’s deemed a 'reasonable excuse', such as the death of a partner or other emergencies which might prevent you from filing on time, such as being admitted to hospital unexpectedly.

There are additional fines if you pay your tax bill late. If it's 30 days late, you'll receive a charge equal to 5% of the tax due; another charge if it's six months late, and an additional charge if the payment is 12 months late.

• Find out more: late tax returns and penalties for mistakes

5. Chance to update previous tax returns

You have until 31 January to tweak your 2022-23 tax return, so if there are any allowances you forgot to take advantage of in the last financial year, then this is your last chance to do so – whether it’s working from home or pension contributions.

Once you’ve filed your 2023-24 return, you can amend it online anytime from 72 hours after you’ve filed it until January 31 2025. 

If you want to update a return from 2021-22 or earlier, you'll need to write to HMRC explaining which tax year you are correcting and why you want to make an amendment. 

• Find out more: tax reliefs - how to reduce your tax bill

6. More time to seek help

Self-assessment isn’t always straightforward, and you may have important questions you need HMRC to help you with. Unfortunately, if you wait until the end of January, you may find yourself in a long queue of other stressed customers who’ve also left it to the last minute. 

If you're finding any part of the process difficult or need to ask a question about self-assessment, then you can call HMRC on 0300 200 3310.

Customers that think they might struggle to settle the bill can apply for a Time to Pay arrangement. This will break up the tax bill into smaller instalments spread over the following months. Keep in mind that you will still incur interest on any tax you haven't paid after the 31 January deadline. 

To set up one of these arrangements, you'll need to be within 60 days after the payment deadline, owe less than £30,000, and have no pre-existing payment plans or debts with HMRC. You can set up a payment plan online or call the Payment Support Service on 0300 200 3835.

HMRC says there is no 'standard' arrangement, so the period for your instalments will be decided based on your circumstances.